The IoT (Internet of Things) can help prevent equipment failure; therefore help every manufacturer that performs aftermarket service offer the best services to their customers.
Many industrial Original Equipment Manufacturers (OEMs) have been forced in the past several years to consider offering aftermarket services – the provision of parts, repair, maintenance, and digital services for the equipment they sell. Not only do aftermarket services provide stable revenue streams, they also do so at higher margins. The average margin on aftermarket services is 25% as compared to only 10% for new equipment sales.
Even though many OEMs are tempted to dive right into data-driven digital service offerings, some have discovered that they can earn more revenue from core aftermarket services. The pressures that drive IoT investment include: ‘the need for increased insight into asset performance’, ‘the need to have a more proactive service model’, ‘the need to improve resource tracking for scheduling purposes’, and ‘the need to develop new services tied to asset usage and performance’. Depending on the industries a company serves, it could be the traditional core aftermarket services and not IoT-enabled digital solutions that are the main driver behind its services revenue.
The new standard is to predict and prevent downtime; therefore companies can’t afford to wait until equipment fails in order to repair it. No matter if the assets are internal or serviceable, the fact remains that both employees and customers are positively impacted when downtime is minimised or eliminated.
The best-in-class organisations, as defined by Aberdeen Research, are those firms that make up the top 20% of firms based on their performance across a diverse set of metrics. Their IoT sets them apart by: improving asset performance yearly at a rate 16% higher than the industry average; improving their operating profit yearly at a rate 15% higher than the industry average; and increasing customer satisfaction rates 10% faster than the industry average.